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ECONOMIC INDICATORS

Trade gap in U.S. widened to $42B as exports fell

AMERICA'S TRADE DEFICIT widened in July for the first time in four months.

BLOOMBERG FILE PHOTO/PAUL TAGGART

Posted:
Tuesday, September 11, 2012 10:20 am

By Michelle JamriskoBloomberg News

WASHINGTON - The U.S. trade deficit widened in July for the first time in four months as the global economic slowdown reduced demand for American-made goods.

The gap grew 0.2 percent to $42 billion, smaller than projected, from a revised $41.9 billion in June, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg survey called for a $44 billion deficit. Exports fell by the most since April, outpacing a decline in imports that reflected cheaper petroleum.

A stagnant Europe and weaker economies in emerging markets such as China may be starting to sap demand for U.S. products, a source of strength for the expansion in the second quarter. At the same time, a rebound in crude oil prices may lead to a higher American import bill.

“Export growth over the next few months, at least, should be relatively weak,’ said Jay Bryson, senior global economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “It’s starting to reflect some weakness in the rest of the world,” and trade will “probably be somewhat of a net drag on growth” in the third quarter, he said.

Deficit estimates of the 74 economists in the Bloomberg survey ranged from $39.7 billion to $47.1 billion. The Commerce Department revised the trade shortfall for June from an initially reported $42.9 billion.

Stock-index futures climbed after Germany’s highest court said it won’t delay its ruling on the euro area’s permanent bailout fund. The contract on the Standard & Poor’s 500 Index expiring this month rose 0.3 percent to 1,431.00 at 9:00 a.m. in New York.

Price-adjusted

Adjusting for changes in prices, the figure used in the calculation of gross domestic product, the trade deficit widened to $46.5 billion from $44 billion a month earlier.

Reflecting the global slowdown, today’s figures showed the U.S. posted a record $29.4 billion trade shortfall with China. The deficit with the European Union surged 42 percent to $12 billion, the widest since October 2007. American exports to Germany were the weakest since February 2010.

Overall U.S. imports declined 0.8 percent to $225.3 billion from $227.1 billion in the prior month, reflecting a drop in the value of inbound deliveries of crude oil to $25.8 billion from $26.4 billion. The cost of a barrel of crude decreased to $93.83 in July from $100.13.

Capital goods imports dropped by $553 million in July due to declines in shipments of computers, industrial machines and aircraft.

U.S. exports

Exports decreased 1 percent in July to $183.3 billion as American companies shipped fewer automobiles, metals and consumer goods abroad.

Before July, U.S. exports were holding up, rising to a record $185.2 billion in June. A narrower trade deficit contributed 0.32 percentage point to the 1.7 percent pace of economic growth in the second quarter, according to Commerce Department figures.

European countries, struggling with a sovereign debt crisis, and a cooling of the expansion in China remain obstacles to U.S. export growth.

In Europe, the U.K. economy shrank 0.5 percent in the second quarter, the weakest performance since the first three months of 2009, the government reported Aug. 24. Italy’s economy contracted for a fourth straight quarter in the three months through June, the government said Aug. 7, as manufacturing slumped and the euro-area debt crisis intensified.

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